A Kolkata arbitration clause didn't give Kolkata court power

The contract said arbitration sittings in Kolkata. But the Supreme Court just ruled that doesn't mean Kolkata courts can appoint the arbitrator.

The property sits in Muzaffarpur, Bihar. The development agreement, its pages thick with registration stamps, was signed and registered in Bihar. The arbitration clause said hearings would be held in Kolkata. When the deal fell apart, the landowner walked into the Calcutta High Court and asked for an arbitrator to be appointed. The judge agreed. The developer's lawyer apparently consented. The Supreme Court has now torn up that appointment. The Calcutta High Court, it said, had no business hearing the case at all. The courtroom fell silent as the bench read out the finding: a defect of jurisdiction strikes at the very authority of the court.

The single question that drives this story: When an arbitration clause says "sittings in Kolkata," does that give the Calcutta High Court the power to appoint an arbitrator? Or is that just a logistical convenience — a place to hold meetings — while the real legal jurisdiction stays in Bihar?

When the property deal turned sour

In 2015, a property developer called Ravi Ranjan Developers and a landowner named Aditya Kumar Chatterjee signed a development agreement for land in Muzaffarpur, Bihar. The agreement, its pages still carrying the faint smell of old paper from the registry, was executed and registered in Bihar. It contained an arbitration clause that said disputes would be resolved by arbitration, and that the sittings would be held in Kolkata.

Things went wrong in 2019. The landowner terminated the agreement. The developer filed a case before the Real Estate Regulatory Authority (RERA) at Patna on May 15, 2019 — a filing that still sits pending. The landowner, in turn, filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 (a provision that allows a court to grant interim protection — like freezing assets or stopping construction — before the arbitration begins) in the District Court at Muzaffarpur on August 17, 2019.

So far, everyone was acting like the case belonged in Bihar.

The Calcutta High Court appointment

Then the landowner did something unexpected. He first filed an arbitration petition in the Calcutta High Court, but withdrew it for technical reasons. He filed a second petition under Section 11(6) of the Arbitration Act (the provision that lets a court appoint an arbitrator when the parties cannot agree on one) in the Calcutta High Court on January 15, 2021. The developer objected, arguing that Calcutta had no territorial jurisdiction — the property was in Bihar, the agreement was in Bihar, and the only connection to Kolkata was that the arbitration hearings would be held there. The courtroom in Calcutta, with its high ceilings and the weight of colonial benches, heard the objection and set it aside.

Despite these objections, the Calcutta High Court appointed an arbitrator on August 13, 2021. The court noted that the developer's counsel had apparently consented to the appointment. The developer later claimed that the counsel acted without instructions and filed a review application on October 4, 2021, which was dismissed.

Why the Supreme Court stepped in

The developer appealed to the Supreme Court. The core argument was simple: the arbitration clause only designated Kolkata as a venue for sittings, not as the seat of arbitration. The distinction matters. The "seat" of arbitration determines which court has supervisory jurisdiction over the arbitration — which court can appoint arbitrators, hear challenges, and set aside awards. The "venue" is just the physical location where hearings happen.

The landowner argued that the clause meant Kolkata was the seat. The developer said it was just a venue — a convenient meeting point, nothing more.

The Supreme Court agreed with the developer. The bench, comprising Justice Indira Banerjee and Justice A.S. Bopanna, held on March 24, 2022, that the clause merely designated Kolkata as a venue for sittings, not as the seat of arbitration. The Calcutta High Court therefore lacked territorial jurisdiction to appoint an arbitrator. The judgment was crisp: a defect of jurisdiction strikes at the very authority of the court to pass any decree.

The seat versus venue distinction

The Court drew on a line of its own precedents. In Bharat Aluminium Company v. Kaiser Aluminium (2012), the Supreme Court had clarified that Part I of the Arbitration Act (which contains Section 11) applies only to arbitrations seated in India. In Indus Mobile Distribution v. Datawind Innovations (2017), the Court held that the seat of arbitration confers exclusive jurisdiction on the courts of that place. In BGS SGS Soma JV v. NHPC Ltd. (2020), the Court further clarified that a mere designation of a place for sittings does not amount to designation of the seat.

The Court also examined Union of India v. Hardy Exploration and Production (India) Inc. (2019), where it had held that the mere designation of a venue does not automatically make it the seat, and Mankastu Impex Pvt. Ltd. v. Airvisual Ltd. (2020), which reinforced that the seat must be expressly agreed upon. In Enercon (India) Ltd. v. Enercon GmbH (2014), the Court had distinguished between a venue chosen for convenience and a seat chosen for legal supervision. These precedents formed a consistent thread: a venue is not a seat unless the parties say so.

The Court applied this principle to the facts. The development agreement was executed and registered in Bihar. The property was in Bihar. The landowner himself had filed a Section 9 application (for interim protection) in the District Court at Muzaffarpur — an act that demonstrated he did not believe Kolkata was the seat. If he truly believed the arbitration was seated in Kolkata, he would have gone to the Calcutta High Court for interim relief, not to a Bihar court.

A defect that consent cannot cure

The Court also addressed a deeper point: even if the developer's counsel had consented to the appointment, that consent could not give the Calcutta High Court jurisdiction it did not possess. "A defect of jurisdiction, whether pecuniary, territorial, or in respect of subject matter, strikes at the very authority of the Court to pass any decree," the judgment read. "Such defect cannot be cured by consent of parties or their counsel. An order without jurisdiction is a nullity challengeable at any time." The weight of those words hung in the air as the bench delivered its finding.

The Court cited Kiran Singh v. Chaman Paswan (1954), a foundational case on jurisdiction, to support this proposition. The principle is simple: a court cannot create jurisdiction by agreement where none exists by law.

What the Court actually ordered

The Supreme Court allowed the appeals. It set aside the Calcutta High Court's order appointing the arbitrator (dated August 13, 2021) and the dismissal of the review application (dated October 4, 2021). But it did not leave the parties stranded. The Court appointed Justice Bhaskar Bhattacharya, former Chief Justice of the Gujarat High Court, as the sole arbitrator. It also directed that status quo on the property be maintained for 15 days, to allow the parties to seek interim relief under Section 17 of the Act (which allows the arbitral tribunal itself to grant interim measures).

The message was clear: the arbitration would proceed, but under the correct jurisdictional framework.

THE PLAY: When drafting an arbitration clause, if you want a particular High Court to have supervisory jurisdiction, use the word "seat" — not "venue" or "sittings" — and state it explicitly. A venue designation alone will not give that court power to appoint arbitrators or hear challenges.

A lesson in drafting precision

For practitioners, this case is a reminder that words matter in arbitration clauses. "Seat" and "venue" are not interchangeable. If parties want the courts of a particular city to have exclusive jurisdiction over the arbitration, they must say so clearly. A clause that says "arbitration sittings in Kolkata" means hearings happen in Kolkata — but the legal seat, and therefore the court with supervisory power, may be elsewhere.

The landowner in this case learned that lesson the hard way. He got his arbitrator appointed, but the appointment was a nullity from the start. The Supreme Court had to step in, set aside the order, and start the process afresh. The cost — in time, money, and litigation — was entirely avoidable.

The property in Muzaffarpur is still waiting for its dispute to be resolved.